HB2681

Report Title:

Condominiums; Managing Agent; Resident Manager; Certification

Description:

Sets forth a process for the certification of all condominium association managers.

HOUSE OF REPRESENTATIVES	H.B. NO.	2681
TWENTY-THIRD LEGISLATURE, 2006
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO CONDOMINIUMS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 514B, Hawaii Revised Statutes, is amended by adding five new sections to part VI to be appropriately designated and to read as follows:

"§514B-A Condominium association managers. (a) Except as stated in subsection (b), every condominium association manager shall be certified, pursuant to section 514B-B, and no managing agent shall employ or retain any person as a condominium association manager unless the condominium association manager has been certified. Within fourteen days after a managing agent employs a person as a condominium association manager, the managing agent shall register the condominium association manager with the commission and submit evidence that the condominium association manager is certified and in compliance with any rules of the commission.

(b) Any person, who on the effective date of this Act:

(1) Has been assisting a managing agent or condominium association in managing the operation of the property for at least two years prior to that date; or

(2) Holds a designation or educational qualification that the commission has approved for an exemption from certification,

shall be deemed certified.

(c) Every condominium association manager shall be considered a fiduciary with respect to any property managed by that condominium association manager.

§514B-B Certificates; prerequisites. Every applicant for a condominium manager certificate under this chapter shall file an application and fee with the commission in a form and setting forth the information as may be prescribed or required by the commission. Every application shall be sworn to before an officer authorized to administer oaths. No certificate shall be issued unless the applicant has demonstrated that the applicant has a reasonable knowledge of condominium law and condominium operations and management, by passing, with a grade satisfactory to the commission, an examination appropriate to the certificate sought. The commission may contract with a professional, independent testing service to prepare, administer, and grade the examination of applicants as may be required for the purposes of this chapter. The examination test shall be approved by the commission and the examination shall be conducted under rules adopted by the commission.

§514B-C Examination; fee. Every applicant for a condominium manager certificate examination shall file an application with either the real estate commission or the testing service agency designated by the real estate commission pursuant to rules of the commission to provide the testing service. The application shall be in a form prescribed by the commission and shall include a certification statement that the applicant has fulfilled, or will fulfill by the date of the examination, the prerequisites for written examination. Every application shall be accompanied by an examination fee pursuant to section 514B-E.

§514B-D Form of certificates. The form of every certificate shall be prescribed by the real estate commission, and shall be issued in the name of the commission and signed by the chairperson or a member of the commission.

§514B-E Fees. All fees for applications, examinations, and certificates prescribed by this chapter shall be as determined by the commission by rules adopted pursuant to chapter 91 and shall be deposited to the credit of the condominium management education fund."

SECTION 2. Section 514B-3, Hawaii Revised Statutes, is amended as follows:

1. By adding two new definitions to be appropriately inserted to read:

""Certified" means any person who has passed an examination approved by the commission that demonstrates the person's basic knowledge of the operation of the property of an association of apartment owners.

"Condominium association manager" means any person employed or retained by a managing agent for the purposes of managing the operation of the property."

2. By amending the definition of "operation of the property" to read:

""Operation of the property" means [the administration, fiscal management, and physical operation of the property, and includes the maintenance, repair, and replacement of, and the making of any additions and improvements to, the common elements.] overseeing and authorizing payments for primary association services or advising and providing administrative, operational, and managerial counsel to the association's board of directors as part of regular and routine job duties, including: developing budgets; presenting and explaining financial reports; soliciting and evaluating bids for work to be performed; routinely performing site inspections; supervising or directing association personnel; directing the enforcement of the restrictive covenants; supervising the design and delivery of recreational programs; soliciting bids, evaluating, and assisting in the purchase of insurance; and supervising maintenance activities and contractor performance."

SECTION 3. Section 514B-132, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every managing agent shall:

(1) Be a:

(A) Licensed real estate broker in compliance with chapter 467 and the rules of the commission. With respect to any requirement for a corporate managing agent in any declaration or bylaws recorded before July 1, 2006, any managing agent organized as a limited liability company shall be deemed to be organized as a corporation for the purposes of this paragraph, unless the declaration or bylaws are expressly amended after July 1, 2006 to require that the managing agent be organized as a corporation and not as a limited liability company; or

(B) Corporation authorized to do business under article 8 of chapter 412;

(2) Register with the commission prior to conducting managing agent activity through approval of a completed registration application, payment of fees, and submission of any other additional information set forth by the commission. The registration application and each renewal shall include the names and addresses of any condominium association managers employed by the managing agents. The registration shall be for a biennial period with termination on December 31 of an even-numbered year. The commission shall prescribe a deadline date prior to the termination date for the submission of a completed reregistration application, payment of fees, and any other additional information set forth by the commission. Any managing agent who has not met the submission requirements by the deadline date shall be considered a new applicant for registration and subject to initial registration requirements. The information required to be submitted with any application shall include the name, business address, phone number, and names of associations managed;

(3) Obtain and keep current a fidelity bond in an amount equal to $500 multiplied by the aggregate number of units of the association managed by the managing agent; provided that the amount of the fidelity bond shall not be less than $20,000 nor greater than $500,000. Upon request by the commission, the managing agent shall provide evidence of a current fidelity bond or a certification statement from an insurance company authorized by the insurance division of the department of commerce and consumer affairs certifying that the fidelity bond is in effect and meets the requirements of this section and the rules adopted by the commission. The managing agent shall permit only employees covered by the fidelity bond to handle or have custody or control of any association funds, except any principals of the managing agent that cannot be covered by the fidelity bond. The fidelity bond shall protect the managing agent against the loss of any association's moneys, securities, or other properties caused by the fraudulent or dishonest acts of employees of the managing agent. Failure to obtain or maintain a fidelity bond in compliance with this chapter and the rules adopted pursuant thereto, including failure to provide evidence of the fidelity bond coverage in a timely manner to the commission, shall result in nonregistration or the automatic termination of the registration, unless an approved exemption or a bond alternative is presently maintained. A managing agent who is unable to obtain a fidelity bond may seek an exemption from the fidelity bond requirement from the commission;

(4) Act promptly and diligently to recover from the fidelity bond, if the fraud or dishonesty of the managing agent's employees causes a loss to an association, and apply the fidelity bond proceeds, if any, to reduce the association's loss. If more than one association suffers a loss, the managing agent shall divide the proceeds among the associations in proportion to each association's loss. An association may request a court order requiring the managing agent to act promptly and diligently to recover from the fidelity bond. If an association cannot recover its loss from the fidelity bond proceeds of the managing agent, the association may recover by court order from the real estate recovery fund established under section 467-16, provided that:

(A) The loss is caused by the fraud, misrepresentation, or deceit of the managing agent or its employees;

(B) The managing agent is a licensed real estate broker; and

(5) Pay a nonrefundable application fee and, upon approval, an initial registration fee, and subsequently pay a reregistration fee, as prescribed by rules adopted by the director of commerce and consumer affairs pursuant to chapter 91. A compliance resolution fee shall also be paid pursuant to section 26-9(o) and the rules adopted pursuant thereto; and

(6) Report immediately in writing to the commission any changes to the information contained on the registration application or any other documents provided for registration. Failure to do so may result in termination of registration and subject the managing agent to initial registration requirements."

SECTION 4. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2006.

INTRODUCED BY:	_____________________________